Internal Records From The Insurance Services Office Can Be Obtained In Insurance Policy Interpretation Disputes

Insurance coverage actions often turn on the interpretation of standard, industry-wide language used in liability policies. Insurance Companies use the services of the Insurance Services Office, Inc. (ISO), to draft standard language for their policies and are also often participants in the drafting of these forms. As a result, policyholders will often seek documents and information relating to the insurance companies’ interpretation of the meaning of the policies, including the drafting history information.

Drafting history may include insurance company manuals, articles written contemporaneously with the drafting of standard-form policy provisions, insurance industry trade publications, insurance industry circulars and explanatory memoranda, and insurance industry representations to the public and to the press. All of which can help a policyholder determine the original intent of the policy terms and the intended application of the policy.

While parties enjoy rights to broad discovery in insurance coverage actions, both parties to a controversy often refuse to provide certain discovery, either because they believe that such discovery is not relevant, unduly burdensome, or the information sought is privileged or confidential.

Insurance companies often argue against discovery of drafting history, citing that the intent of the drafters of standard insurance policy language does not necessarily coincide with intent of the specific parties to the policies at issue and that drafting history, and therefore, is immaterial. Nevertheless, many courts have held that the drafting history is material to issues relating to insurance policy interpretation.¹ The following are a few examples of evidence Policyholders may request during discovery.

Underwriting and Claims Manuals and Materials

Policyholders often seek underwriting and claims handling manuals written by insurance company experts that are used to provide guidance to insurance company employees, because they believe that these manuals may illustrate how the insurance company interpreted their policies. Policyholders also argue that manuals may hold the insurance company’s official position on coverage, claims, and loss control.

Insurance companies argue that these documents provide no relevant information regarding the interpretation of specific policies and, therefore, are irrelevant. Nevertheless, these claims and underwriting manuals have been relied upon by courts in interpreting insurance policies.²

Advertising, Promotional, and Other Marketing Materials

Policyholders often seek to compel the production of advertisements and promotional materials used by the insurance companies, contending they show how insurance companies interpret their policies and what they have represented to consumers. They also demonstrate the insurer’s knowledge of the policyholder’s operations, and of potential underlying hazards or problems and, therefore, can refute an insurance company’s restrictive coverage.

Insurance companies argue that these discovery requests are tangential at best and provide no relevant information regarding the interpretation of specific policies and are therefore irrelevant. Still, courts have stated that training manuals, company policy memoranda, guidelines, and other documents sought may provide evidence as to how insurance companies understood and intended to apply the standard insurance policy language, and are discoverable.³

Other Documentary Evidence

During discovery, policyholders also may seek information regarding communications with their insurance companies’ reinsurers because the communication may lead to the discovery of admissible evidence. For example, reinsurance documents may provide information on “lost” insurance policies where the policyholder has previously purchased a policy but cannot locate the complete copies. They may also provide information on whether and how insurance policies may apply to underlying claims. Numerous courts have allowed the discovery of reinsurance documents.⁴

Thought of the day:

Spectacular achievement is always preceded by unspectacular preparation.
― Robert Schuller
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¹ Nestle Foods Corp. v. Aetna Cas. & Sur. Co., 135 F.R.D. 101, 104 (D.N.J. 1990).
² Andover Newton Theological School, Inc. v. Continental Casualty Co., 930 F.2d 89, 94 (1st Cir. 1991).
³ Hoechst Celanese Corp. v. National Union Fire Ins. Co., 623 A.2d 1099, 1107 (Del. Super. 1991).
⁴ Enron Oil Trading Co. v. Underwriters of Lloyd’s, No. CV-90-122 (D. Mont. Apr. 20, 1994).